DoorDash adds hourly pay option for drivers

Dive Brief:

  • DoorDash is adding an hourly pay option for its delivery drivers and other changes to its driver platform, the company announced Wednesday as part of a suite of changes to its app.
  • The hourly pay option will give drivers a choice between a guaranteed hourly wage plus tips and the company’s current “earn by offer” piece work system. The base rate is determined based on the market in which the driver is working, Rajat Shroff, head of product design at DoorDash, during a Tuesday media presentation.
  • The introduction of the hourly earnings feature coincides with legislative efforts to push gig economy companies to pay their workers higher and more stable wages, including a recent rule in New York City setting delivery driver wages at $17.96 an hour this year.

Dive Insight:

Cody Aughney, VP of dashers and logistics business teams at DoorDash, said the company based the change on feedback from some of its delivery workers, referred to as dashers, who wanted more consistency in pay.

“They want to know exactly how much they’re going to make for their time spent dashing,” Aughney said during the Tuesday event. “From the moment they accept an offer until it’s completed, they’ll earn a guaranteed hourly minimum rate plus, as always, 100% of tips on top.”

Hourly delivery workers will see their hourly rate upfront when they begin delivering while earn-by-offer workers will see a guaranteed minimum to help them decide to accept delivery. Workers can toggle between hourly and piece work rates within the app, according a post on the company’s site.

The option to earn hourly wages may make DoorDash more attractive to gig workers than its major competitors whose base pay is based on per order metrics. Grubhub’s base pay is calculated based on distance, delivery type and time, and UberEats’ pay is based on two flat fees and a distance calculation.

The hourly pay option comes as more states and local governments are considering regulations to increase driver pay and worker protections. New York City, for instance, recently issued a rule to bring delivery driver pay to a minimum of $19.96 an hour by 2025, a move DoorDash characterized as extreme. California courts are still battling over Proposition 22, which overturned a state law classifying gig workers as employees, rather than independent contractors.

Earlier this month, the National Labor Relations Board issued a ruling that could make it easier for gig workers to unionize. Last summer, the Federal Trade Commission said it would take action against issues like “deception about pay and hours, unfair contract terms, and anticompetitive wage fixing and coordination between gig economy companies.”

DoorDash and its competitors have been adding new features and options to improve worker satisfaction. Grubhub, for instance, announced in April that it would offer 500 e-bike credits to NYC delivery workers. It also added several safety features, such as emergency assistance. 

DoorDash, with its latest update, enables drivers to share their GPS location with up to five contacts, in an effort to improve safety. Since November, the company has added 11 safety features for dashers to access, including real-time safety alerts and SafeChat

In addition to hourly pay and safety features, DoorDash added more ways to boost earnings. It added the ability for customers to increase their tips for 30 days after an order. DoorDash is giving a handful of dashers — those who joined early, have completed 10,000 deliveries and are still active — a one-time $10,000 gift. 

DoorDash is adding a feature to increase driver efficiency, Dash Along the Way, which “which allows Dashers to select where they want to start dashing and receive offers that will take them directly there,” according to the company’s site. This may improve the marginal efficiency of deliveries, which may prove important for DoorDash, given that the company lost $171 million on its operations in Q1 2023.

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